When Michael T. Myers Jr., MD, characterizes the prevailing attitude toward Medicare among physicians, he uses the Kubler-Ross five stages of dying. More specifically, he focuses on stages one and two.

"Most physicians are in anger or denial," said Dr. Myers, an internist-turned-consultant who is director for the health care consulting practice at PricewaterhouseCoopers in Boston.

Some physicians insist the program is too complex to understand. Others believe they can't make money from the program or that they have little defense against government auditors who swoop in and demand large repayments. Still others think the simplest error will lead to hefty fines or prison sentences.

There is, of course, a grain of truth in all these concerns. But experts say many of these fears are overblown. "I think there's a bit of hysteria," said David M. Glaser, JD, an attorney with Fredrikson & Byron in Minneapolis who gives talks on Medicare myths and defends clients in audits.

Experts say it's a good idea to have patients sign an advanced beneficiary notice up front for noncovered services like routine physicals, so they don't balk when asked for payment later.

To help ease physicians' fears, experts offer the following explanations to dispel popular misconceptions about the Medicare program:

If Medicare won't cover it, you can't get paid. Suppose a patient's relatives want you to see their mother every week in the nursing home. You know that because she is in relatively stable condition, the weekly visit is not medically necessary—and therefore not reimbursable. But you're willing to do it because she has been a patient for decades. You'll have to write off the costs, because you can't bill patients for charges Medicare won't pay, right?

Not necessarily. By using an advanced beneficiary notice (ABN) form, you can recoup money from patients for services that Medicare generally covers but fail to meet Medicare's "medically necessary" criteria in specific circumstances. In the above example, Medicare covers physician visits to nursing home patients, but would consider weekly visits to a stable patient to be too frequent. The ABN form tells the patient that Medicare is unlikely to pay and asks the patient to agree to take financial responsibility if Medicare declines to pay.

While Medicare expects patients to know they are financially responsible for services that it doesn't cover, experts say it's a good idea to have patients sign an ABN for all noncovered services, like routine physicals. Asking them to sign the form up front helps prevent them from balking at payment later out of confusion.

Physicians "routinely miss the opportunity to do this," said Alice G. Gosfield, JD, a health law attorney and principal of Alice G. Gosfield and Associates in Philadelphia.

You'll take a bath billing Medicare for in-house laboratory work. "A common myth is that labs are essentially a sinkhole for money, especially if you treat many Medicare patients," said Charles Root, PhD, president of MCF Compliance, a Barrington, Ill., publisher and consulting firm that specializes in laboratory economics and compliance issues.

Dr. Root admitted that some tests are money-losers. For example, Medicare generally will reimburse you $14 for a comprehensive metabolic panel that costs about $20 to run. But he suggested that loss-leaders may result in other tests that pay quite well.

A prostate-specific antigen test, for example, typically costs about $5 to run, Dr. Root said, but Medicare reimburses around $25. A complete blood count costs about $2 to perform and reaps a $12 reimbursement.

"Unfortunately, Medicare pays very little for several tests," Dr. Root said. "That's what scared doctors off in many cases. But when you consider the whole mix, lab tests can be very profitable."

You won't be paid unless a claim is perfect. It's a good idea to sweat the details. But even if you forget to dot an "i" or cross a "t", you're entitled to payment for legitimate work covered by the program, said Neil B. Caesar, JD, attorney and president of the Health Law Center in Greenville, S.C., and author of "Physician Practices Compliance Answer Book." As he explained, "You don't have to walk away from an imperfect claim that was medically appropriate as long as you can prove that you did what you said you did."

Some carriers, for example, insist that clinic notes must be signed to be valid. One of Mr. Glaser's clients, a large multispeciality clinic, had a claim denied for that reason. Mr. Glaser's response? "Show me the rule."

"The carrier's provider manual recommends that all notes be signed," he explained. "My response was, 'I recommend you have five fruits and vegetables a day and eight hours of sleep, but that's not a requirement. It's a recommendation.' Even if a carrier's handbook says all notes have to be signed, no federal rule requires you to sign a chart, at least none pertaining to Medicare reimbursement."

The carrier is always right. The private insurance companies contracted by Centers for Medicare and Medicaid Services (CMS) to handle local claims are not the final arbiters of Medicare rules. In fact, many local carriers are unaware of some Medicare regulations and have policies that contradict the federal rules, Mr. Glaser said.

He noted, for example, that a carrier might need to seek an opinion from CMS or a physician to determine if a service not previously denied reimbursement was medically necessary. When a situation is ambiguous (if another opinion is sought, for example), Medicare forbids carriers from automatically charging an overpayment.

Some carriers, however, will go ahead and charge overpayments unless you bring this rule to their attention. "Carriers don't realize that instruction is available," Mr. Glaser said, "so they completely forget about it."

In some cases, Mr. Glaser explained, carriers apply rules inconsistently. He recalled one carrier that denied an oncology practice payment for a particular drug, but sent a letter to another practice 30 miles away indicating that the drug would be covered if the physician deemed it necessary.

When the first oncology group appealed the denial, an administrative law judge ruled in its favor. The group recouped nearly $300,000 in what Medicare had classified as overpayments.

Also keep in mind that local carrier policies may be incomplete. For example, carriers often keep a list of ICD-9 codes that justify a particular service or procedure. Physicians often wrongly assume they can't get paid for a service if the diagnosis isn't on the carrier's list.

"The list simply covers the most common, obviously supported, medically necessary reasons for providing a service," said Sue Prophet, director of coding policy and compliance at the American Health Information Management Association in Chicago. "If a code isn't on the list, physicians just have to supply documentation to Medicare explaining why they feel a patient's symptom or diagnosis indicates the need for the particular service." You can also ask your carrier to add diagnoses to its list of covered codes.

Keep in mind that you can fight city hall. Physicians can appeal a carrier's determination, first to a carrier hearing officer and then to an administrative law judge. (The carrier, on the other hand, can't appeal to a judge if its hearing officer rules in favor of the physician.) Physicians win 42% of all carrier hearings and 60% of administrative law judge decisions.

Coding errors will lead to accusations of fraud—or even prison. Errors certainly draw Medicare's attention. The program routinely crunches numbers to look for providers who fall outside of the statistical norms on a given code, such as an unusual number of high-level visits. If that prompts a Medicare audit that finds billing errors, the government will ask for money back.

But the process often ends there. Physicians are far more likely to receive a request for repayment than face penalties of thousands of dollars per false claim, Mr. Glaser said. To levy penalties, the CMS must prove intent to defraud or reckless disregard of the law.

As for prison, "The idea that someone would be prosecuted and imprisoned for making innocent coding or billing errors is simply incorrect," said Jesse Bushman, a government affairs representative for the Medical Group Management Association in Washington. "You typically have to be engaged in a flagrant fraudulent scam."

"Basically, we are balancing the books and need to fix payment errors," explained Barbara R. Paul, MD, an internist who directs the Physicians' Regulatory Issues Team, a group created within CMS to address physician concerns about the program. "Errors are errors. They are not fraud," she said.

Compliance is too complicated and costly to save you money. Complying can be complicated, but it doesn't have to be overwhelming. Experts suggest that practices begin implementing a voluntary compliance program that includes written standards for coding and billing, mechanisms to conduct self-audits and procedures for educating employees.

It's not as difficult as it sounds. "The meat and potatoes of a compliance program is putting in writing the way you actually do things, including how you document, bill and get paid," Mr. Caesar said. "Compliance basically entails learning the rules and developing a system to ensure they are followed."

The government provides ample documentation for its Medicare rules. To access general physician information on Medicare, go to www.hcfa.gov/medlearn and scroll down to "Medicare & You 2002."

For guidance from the Office of Inspector General (OIG) on how to set up a compliance program, visit http://oig.hhs.gov/fraud/complianceguidance.html. The OIG suggests that physicians put all seven components of a compliance program into place gradually rather than all at once.

Setting up a compliance program will require some effort, but "this stuff is not rocket science," Dr. Myers said. "If they made it through medical school, physicians can understand the Medicare program.

"The idea that Medicare rules will go away or become simpler is a fantasy," he continued. "Until we realize that and deal with it, we are just going to cause ourselves a great deal of pain. We need to face the music and make the appropriate changes."

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